When a working day is more than a working day

Are you across changes to personal and carers leave?

In the months following the Mondelez v AMWU case, which resulted in significant changes to personal and carer’s leave, many businesses have been left feeling confused and uncertain about how personal and carer’s leave is calculated.

Fundamentally, the changes handed down in late August 2019 by The Federal Court of Australia see full-time and part-time employees expressly accruing leave in working days.  

The Fair Work Act states that an employee is entitled to 10 days of personal and carer’s leave for each year of service with the employer. However, practically many businesses accrue personal and carer’s leave in hours i.e. 76 hours per annum for full-time employees working 38 hours per week, with part-time employees receiving the same entitlement on a pro-rata basis, based on hours worked.

The interpretation of the ruling by the Fair Work Commission indicates the changes to personal and carer’s leave do not significantly affect full-time employees working a standard working week. However, if we look at employees working different part-time or non-standard working arrangements, we can start to see how the recent ruling may be interpreted to provide quite different entitlements for these employees.

Practical examples

Ben, Grace, April and John all work for ABC Accounting & Finance who pride themselves on being a flexible employer:

  • Ben requested flexibility to do school pick up and drop off and therefore, works 5-hours a day, Monday to Friday;
  • Grace is a junior employee who works 7.6 hours, 4 days a week while she finishes her post-graduate degree;
  • April is an Account Manager working with a large number of overseas clients and works a compressed workweek of 9.5 hours a day over 4 days so that she can do early and late meetings; and
  • John, a Senior Accountant, works a standard workweek.

As you can see from the comparison of calculation methods above, the changes introduced by The Federal Court favour those who work long hours over fewer days. Based on the new calculation method in some cases part-time employees accrue less hours of personal and carer’s leave.

Employee Based on hours worked (old method) Based on 10 working days (new method)
Ben 10 days based on 25 hrs/wk (50 hrs) 10 days of 5 hrs (50 hrs)
Grace 10 days based on 30.4 hrs/wk  (60.8 hrs) 10 days of 7.6 hrs  (76 hrs)
April 10 days for a full-time employee working 38 hrs/wk (76 hrs) 10 days of 9.5 hrs (95 hrs)
John 10 days for a full-time employee working 38 hrs/ wk (76 hrs) 10 days of 7.6 hours (76 hrs)

The Federal Court stated the intention of the ruling was to guarantee all employees are provided with an equal number of days off. However, this has come at a significant cost, with the Attorney-General and Minister for Industrial Relations Christian Porter estimating that the additional cost to businesses could be up to $2 billion per year.  

It should be further noted that if this interpretation is upheld, many businesses will face additional upheaval and potential expense in changing payroll systems to accrue hours rather than days.

What is next?

On Monday 16 September 2019, the Morrison Government announced it would seek to appeal the recent Federal Court decision and address the inequities created from this change.  

Mondelez has also announced it intends to lodge their own appeal.

Contact WCA- People & Culture Solutions if you require assistance with Human Resources and Industrial Relations on (08) 9383 3293 or email admin@wcasolutions.com

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